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's Second Insolvency Petition Barred by Under Section 96: NCLT Guwahati
The delivered a significant ruling on , holding that the under protects a as a whole—not just against a specific debt. The Bench, comprising Judicial Member Shri Rammurti Kushawaha and Technical Member Shri Yogendra Kumar Singh, rejected ’s insolvency petition against Satyawan Sarma, finding that a second application under could not be filed while an earlier petition against the same guarantor remained pending.
A Tale of Two Guarantees
The dispute traces back to 1998, when availed credit facilities from . Satyawan Sarma executed multiple letters of guarantee—on , , and —to secure the loans. After the account was classified as a on , the bank moved the , in O.A. No. 3/2012. The parties entered into a compromise on for ₹12.65 crore, but the guarantors defaulted, leading to a recovery certificate that remained unexecuted.
Meanwhile, had already filed a separate insolvency petition under against the same —this time in respect of guarantees executed for a different corporate debtor, That petition, registered as CP(IB)/11/GB/2025, was pending when the bank filed the present petition concerning Lohit Construction on . The Tribunal appointed Amit Pareek as , who submitted a report recommending admission of the petition.
The Jurisdictional Challenge
Satyawan Sarma opposed the second petition through IA(IBC)/79/GB/2026, arguing that the pendency of the earlier proceeding triggered an under Section 96 of the IBC, which barred any fresh insolvency application against him. He contended that the Financial Creditor had suppressed the earlier petition and that the ’s report was flawed for ignoring this statutory bar.
countered that the two petitions involved different corporate debtors, distinct guarantees, and separate debts. It argued that Section 96 operates only in respect of the specific debt that is the subject of the first application, and therefore did not prevent the filing of a second application based on an independent default. The supported this view, submitting that he was not required to adjudicate jurisdictional issues at the .
Protection: The Court’s Reasoning
The NCLT rejected the bank’s narrow reading of Section 96. Analysing the language of the provision, the Bench noted that the Legislature deliberately used the expression “” rather than “the debt” in . This choice, the Tribunal held, was intentional and significant.
“Had the Legislature intended to confine the protection of the to the specific debt forming the subject matter of the first application, it would have said so in express terms,” the Bench observed.
The Tribunal emphasised that the under Section 96 is in character. Its purpose is to shield a , once subjected to insolvency proceedings, from being simultaneously pursued through multiple parallel applications by different creditors—or even the same creditor—in respect of different debts. The protection lasts from the date of filing of the first application until its admission or rejection under Section 100.
Applying this principle, the NCLT held that the pendency of CP(IB)/11/GB/2025 as on operated as a complete bar to the institution of any further application against Satyawan Sarma, including the one concerning Lohit Construction. The Tribunal further noted that , which was fully aware of the earlier proceeding, had failed to disclose its pendency when filing the second petition—a breach of the .
Key Observations
The judgment contained several critical observations that clarify the scope of the :
“The deliberate use of the unqualified expression ‘’ indicates that the under Section 96 is in character, i.e., it is intended to protect the person of the , once he becomes the subject of insolvency proceedings, from being simultaneously subjected to under .”
“This construction is consistent with the scheme of , which, unlike the corporate insolvency resolution process, is designed around the person of the individual debtor rather than around a specific debt or a specific creditor relationship.”
“The Financial Creditor, being fully aware of the pendency of CP (IB)/11/GB/2025 and having itself instituted the same, was under a to disclose this fact to this Tribunal at the time of filing the present Petition. It failed to do so.”
Decision and Implications
The NCLT allowed the ’s interlocutory application, IA(IBC)/79/GB/2026, and rejected the main Company Petition, CP(IB)/24/GB/2026, under . The order dated appointing Mr. Amit Pareek as , and all consequential proceedings including his report recommending admission, were declared and set aside.
This ruling has far-reaching implications for insolvency proceedings against personal guarantors. It confirms that once a application is filed against an individual, the under Section 96 attaches to the person of the guarantor, not merely to the debt in question. Creditors cannot circumvent this protection by filing based on different guarantees. The judgment reinforces the need for full disclosure by financial creditors and underscores the nature of the personal insolvency framework under the IBC.
